The Best Crypto Exchanges to buy and invest in Polkadot (DOT)

The Best Exchanges to buy and invest in Polkadot (DOT)

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Invest in Polkadot (DOT) on Bybit

What is Polkadot? Description of DOT Token

Polkadot is one of the most ambitious cryptocurrency and blockchain projects of 2020, which has sparked interest in the cryptocurrency community. Developed by the Swiss-based Web3 Foundation, this project seeks to create a user-friendly and decentralized Internet of the future. Polkadot offers users a next-generation, interoperable, scalable and secure blockchain.

Polkadot is a scalable, customizable, self-contained blockchain network that seamlessly interacts and communicates in a trusted and secure ecosystem. This blockchain-centric project seeks to replace centralized applications and become the next-generation Internet as decentralized applications (dapps).

In a world where the value of data continues to grow, the Internet has become a conduit for large, centralized organizations to collect data from Internet users. While most users give out their data for free, the average user has no choice but to trust that their data will not be misused, lost or stolen by organizations.

We have arrived in a world dominated by open source and decentralized technologies. It has been proven that alternative decentralized applications can be built online that prioritize individual sovereignty over personal data. However, although Bitcoin as a peer-to-peer digital currency and Ethereum as a global complete virtual computer have made great strides, both systems have found limitations in their design. As a result, Polkadot is emerging as a solution to the scalability problem currently facing blockchain.

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What is Polka Dot?

Polkadot can be described as an ecosystem in which multiple blockchains (chains) interact within a complex economic activity.

Consider here a blockchain for banking applications, a blockchain built for musicians, and another blockchain for managing supply chains interacting with each other.

All blockchains follow the way they interact and communicate with each other.
So, unlike blockchains that are essentially one-connected, Polkadots are made up of dozens of sub-blockchains with blocks designed to be programmable to create a new and better internet.

This next-generation Polkadot Blockchain network is built and integrated to facilitate scalable, easy-upgrade, transparent application ecosystem connectivity, and is also ready for large-scale network integration.

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How does the Polka Dot Network work?

Polkadot is a “Sharded Blockchain Network” that connects multiple blockchains to a single network using a sharding model of different nature to exchange data with each other and process transactions with added security.

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An explanation of the different kinds of sharding

In the world of blockchain development, sharding refers to the horizontal partitioning of a database on a network into “shards” for scalability purposes. Given the limited data throughput and lack of execution time seen in early blockchains, the sharding process serves to easily reduce the burden on the entire network by partitioning the network into separate databases.

Traditionally, every node (computer) in a blockchain network stores and processes all sensitive information such as transaction records, wallet balances and account details. While this design ensures the security of the blockchain, transaction processing slows down considerably, especially as more nodes are connected to the network.

By segregating sensitive transaction information into shards, blockchains can distribute responsibilities for processing across nodes in the network, reducing overall latency and addressing scalability issues.

According to a white paper that briefly summarizes Polkadot, it is impractical to build customizable and scalable dApps using real-world use cases across existing and historical networks. The unique sharding of Polkadot’s different nature allows each blockchain in the network to be optimized for specific use cases, allowing more innovation.

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Polka Dot Ecosystem

Relay chain

The Polkadot Network is designed to create a blockchain based on relay chains connecting individual chains. The relay chain is responsible for the security of the network and works to achieve consensus and interoperability between connected blockchains.

Parachain

In the Polkadot network, an individual or autonomous blockchain capable of hosting tokens and optimizing their functionality depending on the use case is called a parachain. Parachain works concurrently with each other, helps to scale the system, and decentralizes responsibility for parallelized tasks. Parachain creates these parallel structures by paying or renting slots for relay chains.

Bridge

A bridge in the PolkaDot ecosystem is a special blockchain that exists inside PolkaDot that connects external blockchains (chains that do not use the PolkaDot governance structure) to the relay chain. Therefore, the Polkadot network connected to the Parachains through the bridge can communicate with the blockchain of Ethereum or Bitcoin smoothly.

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Polkadot governance design

The Polka.network is referred to as the “ appointed proof-of-stake protocol” and is governed by a special proof-of-stake protocol of interest. The Polkadot Network is made up of validators, proofreaders, supervisors, appointees, committee members and technical committees.

Validators contribute to the security of the relay chain by using DOT tokens and participating in consensus with other validators to get proofs verified by proofers.

Correctors maintain Parachain by collecting transactions from Parachain or sending proof of transactions to validators. The appointee is also responsible for the security of the relay chain by depositing DOT tokens on Polkadot and selecting trusted validators. Watchers monitor the network by monitoring and reporting bad behavior of validators (composed of all correctors or parachains).

Finally, the governance structure of Polkadot consists of committee members representing those who deposit and observe DOT tokens in the network’s decision-making process.
There is also a technical committee of developers who, together with committee members, proposes urgent agendas.

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Dot token

A total of 1.02 billion DOT tokens were issued. According to CoinMarketCap, the total circulation at the time of writing was over 900 million . Polkadot operates as an inflation system that encourages validators to deposit and participate in DOT tokens, instead of providing volume through fundraising.

At the time of writing, the DOT token, priced at $4.66, has a market cap of over $4 billion and is in the top 10 by market capitalization, but Polkadot’s Genesis Block , which was scheduled to be released , was not released until March 26, 2020.

As discussed above, staking is one of the main purposes of DOT tokens. DOT is also used for governance as it gives token holders full control over the network decision-making process. By electing committee members, token holders can change protocols, add or remove parachains, and participate in decision-making on the network’s fee structure.

DOT tokens are also used as collateral, and as a proof-of-stake process where validators deposit DOT tokens to add new parachains to the network or remove old or duplicate parachains.

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Polkadot price and outlook

To predict the future value of DOTs, it is important to first understand the history of Polkadot. DOT tokens were first sold during the Polkadot ICO in 2017. At the time, Polkadot was able to raise $ 140 million. However, there were two DOT private sales in 2019 and 2020, respectively, but some suffered losses after that.

On fundraising day, the DOT was priced at around $30. However, the DOT Foundation performed a face split of the DOT coin in August 2020, increasing the circulation of DOT 100 times. Thus, former DOT token holders will receive 100 new tokens per 1 DOT token. As a result, DOT’s stock split increased the initial circulation from 10 million to 1 billion now.

While the split doesn’t change the value of the token itself, the surge in speculation at low prices has created a recent rally. Following the current trend, market analysts predict that the DOT token will surpass the current price of $4.5 and end at over $5 per year. Although it is difficult to accurately predict the market’s movements, analysts predict that the price of DOT will increase to over $8 in early 2022 and to over $25 in 2025. Other analysts are predicting an imminent downtrend, with the price of DOT expected to drop by as much as 90% by the end of this year or early 2021.

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The future of polkadot

The future of Polkadot and DOT tokens looks bright as there are already many real-world use cases for projects in the real world. Polkadot’s ability to integrate with numerous blockchains may rise to a higher level in the future as other blockchains are more likely to adopt Polkadot. However, as to whether Polkadot is a good investment, anyone can guess how future market fluctuations will affect DOT’s price.

Currently, Polkadot has become an important and high-profile project in the development of blockchain and cryptocurrencies due to its special features. Of course, critics argue that Polkadot’s sharding process can cause vulnerabilities, but Polkadot has so far partnered with famous projects like Chainlink to reinforce the advantages of the sharding model and
realize its goal.

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